PM urged to 'strike motorist deal'

The PM should do this by cutting fuel duties when oil prices rise and scrapping his plan to apply new green levies on polluting cars to vehicles which are already on the road, a former minister has said.

The old fuel duty escalator, which pushed petrol taxes up by more the rate of inflation, should be dumped and replaced by a "duty moderator", which would allow reductions when high prices at the pump boost the Treasury's VAT take, said Stephen Ladyman.

The Thanet South MP is one of 10 'New Labour' backbenchers who have set out proposals for policy changes to revive the party's fortunes following last week's by-election defeat in Crewe and Nantwich.

Some of their proposals would mean a sharp shift away from Mr Brown's programme, such as a radical overhaul of tax credits to replace the current complex system with simpler flat-rate support; tax cuts on sensitive goods and services including fuel; and ditching unpopular environmental policies like "pay-as-you-throw" rubbish collection charges.

The MPs - including five former ministers and three serving ministerial aides - set out their ideas in separate essays published on the internet by New Labour magazine Progress.

While each is writing as an individual, Progress said their ideas stem from the conviction that Labour must reconnect with voters and focus relentlessly on their aspirations, which have moved on since 1997.

Dr Ladyman - whose 664 majority makes him one of the MPs most vulnerable to a swing to the Conservatives in 2010 - warned that ministers must recognise Labour voters are also motorists and are more likely to ditch the party than give up their attachment to their cars.

"Motorists understand the need to raise money from fuel duty but they don't believe the fuel duty escalator and recent changes to road tax are fair," he wrote. "So let's start the process of striking our deal with the motoring public by scrapping the fuel duty escalator and replacing it with a duty moderator that recognises that when the price of fuel goes up the Exchequer's VAT take increases and the rate of fuel duty can go down.

"Second, a 'green' tax that you cannot avoid by changing your behaviour is not a 'green' tax, it's just a tax. So, in future, changes to excise duty aimed at encouraging people to drive cleaner cars should never bite on vehicles already on the road but always to new vehicles."